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(Ignore income taxes in this problem.) Z Company has gathered the following data on a proposed investment project:
| | Investment in equipment.................................. | $150,000 |
| | Annual cash flows........................................... | $40,000 |
| | Salvage value of equipment............................. | $0 |
| | Life of the equipment....................................... | 10 years |
| | Required rate of return.................................... | 10% |
The company uses straight-line depreciation on all equipment.
Required:
(iii) Calculate the ARR
A.
53.33%
B.
33.33%
C.
10%
D.
none of the above
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